Q: Student loans, home loans

There is no need for you to cosign on your sister-in-law's student loans. Credit is not going to be an issue. Financial need is the only criteria that is looked at and if your sister-in-law is over 21 then hers and her husband's income are used to decide whether she will qualify for subsidized or unsubsidized and also for how much. She needs to talk to the financial aid office at the school.

It generally will effect your FICO score if you cosign on your sister-in-law's loans. Whether or not they are student loans matter not at all.

Hope this helps you.

Brian

 

pbm, a couple of thoughts come to mind (that will hopefully be helpful):

1) Even people with less than stellar credit can qualify for student loans. My question is what did you mean by "far from perfect credit"? If you meant that she messed up with previous student loans, see #4 below. If not, I don't think she needs to worry.

2) Believe it or not, student loan providers don't pull your credit with the big three credit reporting agencies. With a "Guaranteed Student Loan" (the most common type), not only are you pretty much "guaranteed" to get them lol, but the loan is ALREADY CO-SIGNED by a student loan "guarantor" (basically the student loan version of a collection agency) who wins the privilege from the start of adding nasty penalties and will hound the former student to death should she default. For that reason, a co-signer is not required.

3) I'm not completely sure of this, but a quick call to the Department of Education will confirm this... I don't even think it's possible to co-sign for a "Guaranteed Student Loan" since it's already guaranteed by the guarantor. Check that out.

4) Student loan providers DO CHECK SOMETHING CALLED THE "NSLDS DATABASE" -- the student loan version of a credit bureau, maintained by the US Dept. of Education... If your sister-in-law previously had student loans which were DEFAULTED, then the NSLDS database will reflect that, and she won't be able to qualify for a new loan -- without jumping through a few more administrative hoops. If the previously defaulted loan was paid off in full, then she probably won't have a problem upon reconsideration, but she will be hassled just a bit at the start. If the previously defaulted loan was rehabilitated (see http://www.nslds.ed.gov), then she won't have a problem at all.

5) A general tip for better living: co-signing loans can make your life a living hell if something terrible and unexpected happens to the primary debtor. It can also make you look over-extended if you're going for a mortgage. That said, I still don't think you can co-sign for a "Guaranteed Student Loan, but call the Dept. of Education to confirm all of this.

I hope these notes were helpful!

Doc

 

All of my daughter's student loans are federal. She got the first one at age 17. No co-signer was ever asked for. I don't think they run a credit check - her credit is awful! The first step is for your sister-in-law to file a FAFSA. ( Free Application for Federal Student Aid) She can do this on-line at www.fafsa.ed.gov. I'm not sure if she can do it now or if she has to wait 'till Jan 1st. (My daughter has to wait 'till then, but it may be because she already has loans.) If you have any more questions, just whistle, as I have become quite the expert in this field. Oh, don't forget about State grants.

 

Hey, what fla-tan and anna said, lol. We were all typing our answers at the same time, and they did it with less verbiage.

Doc

 

PBM,

Don't do it, don't do IT, DON'T DO IT!!!!! Your sister can get federally backed loans, therefore, she will qualify, providing she hasn't defaulted on a student loan in the past. And even if she has, as long as she's made payment arrangements, or taken steps to rehab them, she'll still qualify. And while I'm on the subject, if any of you have federal student loans that you are having problems repaying, DON'T sit there and let them default. Call your lender and ask for a forebearance or deferrment. Student loans are the most flexible loans you can have, because 1.) if you somehow end up unemployed, you can get an unemployment deferrment; 2.) if you are having a cash crunch and need some breathing room, you can get a reduced payment forebearance, and YOU get to name the payment. Therefore, even if your payment is $300 bucks a month and you want to only pay $30 a month for a while, you can do that. Of course, the interest will still accrue, but stretched over the course of up to 30 years, the damage is minimal.

Good luck in your home search and thank you for creating this board

 

Not all student loans are â??guaranteedâ?. Some student loans, generally graduate level (and I think Vet school would qualify for that), Law, Medical, etc. are based entirely on your credit worthiness. I think it is entirely in your friend's best interest to discuss her options with the financial aid office and I would not co-sign on a loan UNLESS you have the ability to repay it and are willing to do so. You never know what could happen.

If you co-sign and it listed on your credit report, how it impacts your report depends on how the lender lists the entry. For example, if it will be deferred for the next 3 years, it may not be that big of a deal. Any mortgage people out there who can answer his question?

 

Here's the thing with loans for post-secondary schooling....Yes some loans are federaly backed and most people are granted those loans....As I am applying to law schools I am very into this right now...There are a great deal of loans that are credit based since costs for this type of schooling far exceed what a student is granted.

My opinion is this...I would not co-sign for the simple reason that many just out of school are not able to truly afford the minimum payment on the loan fresh out. Eventually they will, but there is no sense on putting your name on something that has a high percentage of being late or defaulted. NO, don't co-sign.

Just so you all know.. (ask Roni), that for post-secondary schooling cost a bit more and credit is a requirement for some loan types to cover all educational and educational-related expenses.

 

I agree with PsychDoc's post. If she has never defaulted on previous student loans, then she will get federal funds without any credit check, provided the financial need is demonstrated. If she has defaulted on previous student loans, there are ways to quickly get past that to regain access to federal funds (via consolidation or rehabilitation). Actually, Bkev had great ideas on how to get things moving quickly in this scenario.

Either way, there's no reason to risk your own credit by co-signing, since for these loans it's not really necessary.


Best wishes, and thank you for all of your hard work maintaining this board. It has changed my life.

 

I agree with the posters talking about unsubsidized/subsidized loans. I financed about 70% of my grad-school through Stafford loans at a time when my credit was horrific. Ditto for my best friend, who is an OB/GYN. Yes, private loans were there, but I would try federal student loans first. No co-signer required.

 

Pbm,

What kind of bull is your sister-in-law kicking to you. First of all, if your sister-in-law is already accepted to veterinary school, I would assume she has already attended college. When obtaining loans for post graduate education, the guidelines are much more lenient, and she should be able to get federal student loans to cover the ENTIRE cost of attending school.

The health professions loans sometimes ask for credit reference but those are only used when federal loan eligibility is depleted...usually by applying for a professional school which is too expensive.

Graduate/professional federal loans eligible is roughly $20,000 annually. (i dont remember the exact amount)